Hostname: page-component-78c5997874-mlc7c Total loading time: 0 Render date: 2024-11-13T09:20:49.031Z Has data issue: false hasContentIssue false
  • English
  • Français

The Sterling Effective Exchange Rate and Other Measures of UK Competitiveness

Published online by Cambridge University Press:  26 March 2020

Ray Barrell ,
Amanda Choy ,
Dawn Holland  and
Rebecca Riley
Ray Barrell*
Affiliation:
National Institute of Economic and Social Research
Amanda Choy*
Affiliation:
National Institute of Economic and Social Research
Dawn Holland*
Affiliation:
National Institute of Economic and Social Research
Rebecca Riley*
Affiliation:
National Institute of Economic and Social Research
*
e-mail: r.barrell@niesr.ac.uk
a.choy@niesr.ac.uk
d.holland@niesr.ac.uk
r.riley@niesr.ac.uk
Get access Rights & Permissions [Opens in a new window]

Extract

Movements in exchange rates attract much attention, both for the signals they may contain about future inflation prospects and for their implications for the competitiveness of firms. However, movements in bilateral exchange rates, for instance in sterling against the dollar or the euro, do not convey enough information for either policymakers or for firms except in relation to specific bilateral transactions. It is useful to construct summary measures of exchange rate movements, and there are a number of ways of doing this. The choice of measure depends upon the use to which it is to be put. Some measures, such as the effective exchange rate, are summary indicators, whilst others such as export competitive indices are more relevant when evaluating the prospects for export developments. Some indicators weight together nominal exchange rates. Others are measures of real exchange rates, weighting together exchange rate adjusted relative prices. The indicators chosen should be seen in the context in which they are used.

Type
Articles
Information
National Institute Economic Review , Volume 191 , January 2005 , pp. 54 - 63
Copyright
Copyright © 2005 National Institute of Economic and Social Research

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Lynch, B. and Whitaker, S. (2004), ‘The new sterling ERI’, Bank of England Quarterly Bulletin, Winter, pp. 429–441.Google Scholar
Marsh, I.W. and Tokarick, S.P. (1994), ‘Competitiveness indicators: a theoretical and empirical assessment’, IMF Working Paper WP/94/29.CrossRefGoogle Scholar
Zanello, A. and Desruelle, D. (1997), ‘A primer on the IMF's information notice system’, IMF Working Paper WP/97/71.CrossRefGoogle Scholar